SARFAESI ACT – 2002 - 15 Mints Seminar notes

      SARFAESI ACT – 2002 - 15 Mints Seminar notes

Who introduced sarfaesi act

Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under section 13 of SARFAESI Act, 2002.

Parliament of India
Enacted by    -  Parliament of India
Enacted        - 17 December 2002
Signed by     - President of India
Commenced  -    21 June 2002

What are the main features of sarfaesi Act 2002

 Highlights of SARFAESI Act, 2002

Nature of transaction to be Registered  - FORM No.

1.    Particulars of creation or modification of Security Interest in favor of secured creditors  -  Form I

2.    Satisfaction of any existing Security Interest  -  Form II

3.    Particulars of securitisation or reconstruction of financial assets -   Form III

What is sarfaesi auction 

• The SARFAESI Act of 2002 empowers a secured creditor—usually, a bank to sell the pledged immovable property and recover his dues. Such sales are usually done by a public auction. ... So, then, can the secured creditor wash his hands off, after concluding the sale.
  

NON PERFORMING ASSET  :-

“non-performing asset” means an asset or account of a borrower, which has been classified by a bank or financial institution as sub - standard, doubtful or loss asset

(a) in case such bank or financial institution is administered or regulated by any authority or body established, constituted or appointed by any law for the time being in force, in accordance with the directions or guidelines relating to assets classifications issued by such authority or body

 (b) in any other case, in accordance with the directions or guidelines relating to assets classifications issued by the Reserve Bank

REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS OF BANKS AND FINANCIAL INSTITUTIONS

Registration of 3 [asset reconstruction companies].

(1) No 1 [asset reconstruction company shall commence or carry on the business of securitisation or asset reconstruction without

(a) obtaining a certificate of registration granted under this section

[(b) having net owned fund of not less than two crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify , Provided that the Reserve Bank may, by notification, specify different amounts of owned fund for different class or classes of 3 [asset reconstruction companies]: Provided further that a 1 [asset reconstruction company]

existing on the commencement of this Act, shall make an application for registration to the Reserve Bank before the expiry of six months from such commencement and notwithstanding anything contained in thissub-section may continue to carry on the business of securitisation or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.

Acquisition of rights or interest in financial assets

(1) Notwithstanding anything contained in any agreement or any other law for the time being in force, any 2 [asset reconstruction company may acquire financial assets of any bank or financial institution

(a) by issuing a debenture or bond or any other security in the nature of debenture, for consideration agreed upon between such company and the bank or financial institution, incorporating therein such terms and conditions as may be agreed upon between them; or

(b) by entering into an agreement with such bank or financial institution for the transfer of such financial assets to such company on such terms and conditions as may be agreed upon between them. 1 [(1A) Any document executed by any bank or financial institution under sub-section (1) in favour of the asset reconstruction company acquiring financial assets for the purposes of asset reconstruction or securitisation shall be exempted from stamp duty in accordance with the provisions of section 8F of the Indian Stamp Act, 1899 (2 of 1899): Provided that the provisions of this sub-section shall not apply where the acquisition of the financial assets by the asset reconstruction company is for the purposes other than asset reconstruction or securitisation.

Exemption from registration of security receipt 

Notwithstanding anything contained in sub - section

(1) of section 17 of the Registration Act, 1908 (16 of 1908)

(a) any security receipt issued by the 1 [asset reconstruction company], as the case may be, under sub-section (1) of section 7, and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder of the security receipt to an undivided interest afforded by a registered instrument; or

(b) any transfer of security receipts, shall not require compulsory registration.

Registration by secured creditors and other creditors

(1) The Central Government may by notification, extend the provisions of Chapter IV relating to Central Registry to all creditors other than secured creditors as defined in clause  of sub-section

(1) of section 2, for creation, modification or satisfaction of any security interest over any property of the borrower for the purpose of securing due repayment of any financial assistance granted by such creditor to the borrower.

 (2) From the date of notification under sub-section (1), any creditor including the secured creditor may file particulars of transactions of creation, modification or satisfaction of any security interest with the Central Registry in such form and manner as may be prescribed.

(3) A creditor other than the secured creditor filing particulars of transactions of creation, modification and satisfaction of security interest over properties created in its favour shall not be entitled to exercise any right of enforcement of securities under this Act

Power of Central Government to make rules

(1) The Central Government may, by notification and in the Electronic Gazette as defined in clause (s) of section 2 of the Information Technology Act, 2000 (21 of 2000), make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:

1 [(a) other business or commercial rights of similar nature under clause (t) of section 2;] 2 [(aa)] the form and manner in which an application may be filed under sub-section (10) of section 13;

(b) the manner in which the rights of a secured creditor may be exercised by one or more of his officers under sub-section (12) of section 13;

[(ba) the fee for making an application to the Debts Recovery Tribunal under sub-section (1) of section 17; (bb) the form of making an application to the Appellate Tribunal under sub-section (6) of section 17; (bc) the fee for preferring an appeal to the Appellate Tribunal under sub-section (1) of section 18;] 1 [(bca) the manner of integration of records of various registration systems with the records of Central Registry under sub-section (1) of section 20A; (bcb) the terms and conditions of delegation of powers by the Central Government to the Reserve Bank under section 20B;] (c) the safeguards subject to which the records may be kept under sub-section (2) of section 22;

(d) the manner in which the particulars of every transaction of securitisation shall be filed under section 23 and fee for filing such transaction; 1 [(da) the form for registration of different types of security interests and fee thereof under sub-section (3) of section 23;]

(e) the fee for inspecting the particulars of transactions kept under section 22 and entered in the Central Register under sub-section (1) of section 26; (f) the fee for inspecting the Central Register maintained in electronic form under sub -section (2) of section 26; 1

[(f) the form and the manner for filing particulars of transactions under sub-section (2) of section 26B; (fb) the form and manner o 

Presented By,

Gopinath

Banking Student

Magme School Of Banking